RBI MPC Meeting 2025 LIVE: No major Impact on Economy Due to India-Pak Conflict, Says Guv Sanjay Malhotra

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) is set to announce its interest rate decision today, June 6 (Friday). After the central bank began its rate-cutting cycle in February and followed up with another reduction in April, the focus now shifts to the possibility of a third consecutive cut.

From stabilised domestic growth to inflation well below the RBI’s target, several indicators are pointing towards a prospective rate cut. April’s CPI inflation stood at 3.16%, while Q4 GDP growth came in at 7.4%, exceeding expectations.

However, the optimistic outlook might be dampened by geopolitical turbulence triggered by Trump’s tariff play.

"We are foreseeing a 25-bps rate cut to boost the current growth trajectory while keeping retail inflation in check. Going forward RBI is likely to slash rates by 1-2 times in FY26. However, going forward understanding GDP growth and inflation forecasts becomes highly important. RBI’s analysis on how global environment would be affecting Indian economy considering the tariff reprieve provided by US would end in July will be of high significance as well," said Vaqar Javed Khan, senior fundamental analyst (CFA), Angel One Ltd.

"Unlike previous disinflation episodes primarily driven by volatile food prices, the current moderation is broad-based across multiple segments of the consumer basket. This widespread easing bolsters confidence that inflation expectations are well anchored, allowing the RBI to focus on growth support without risking price stability," said Sankar Chakraborti, MD and CEO, Acuité Ratings and Research Ltd.

"Growth patterns across sectors present a mixed picture: services continue to demonstrate resilience, manufacturing growth remains subdued, and rural consumption trails behind urban demand. The current easing monetary policy cycle will bring in some relief to strained sectors. However, risks persist... we anticipate a further repo rate cut of 25 basis points, bringing it down to 5.75%," he added.

"Falling inflation will give the RBI the flexibility to prioritise growth amidst external headwinds. While growth momentum has improved, challenges like uneven consumption recovery, muted private capex growth, and subdued manufacturing growth remain CPI inflation is expected to stay comfortable in FY26. This opens room for further monetary policy easing. We expect the RBI MPC to cut the policy rate by another 50 bps in FY26 (including 25 bps in June), with chances of a deeper rate cut cycle if growth falters," analysts at CareEdge Ratings said.

"The discussion within the MPC is likely to continue to revolve around tariffs and its implications, despite the recent calm due to the pause in reciprocal tariffs. Global central banks will choose to remain data dependent till the US finalises bilateral trade deals," said Hitesh Suvarna of JM Financial Securities.

"We believe that the robust GDP growth in 4QFY25 and easing inflation trajectory in the domestic economy will restrict RBI’s ability to front-load (50bps) rate cuts. Although capex intensity and liquidity have improved, credit growth continues to moderate. Front-loading of rate cuts will suppress the interest rate differential further, risking negative impact on flows," Suvarna added.

Over the last five trading sessions, the Nifty Realty index has surged by 3.42%. Whereas, Nifty Bank has increased by 112.85 points or 0.20% during the same period.

"With all eyes now on the outcome of the upcoming MPC meeting, the continued outperformance of rate-sensitive sectors such as banking, realty, and auto appears to be factoring in a 25 bps rate cut. However, the RBI’s commentary will be crucial, given the mixed global cues amid a favorable domestic environment," said Ajit Mishra – SVP, research, Religare Broking Ltd.

"In today’s monetary policy, the RBI is likely to cut policy rates by 25 bps. This is already factored in by the market. More important will be the RBI commentary on growth and inflation projections for FY26. If the inflation forecast is cut from 4% the market would respond positively," said VK Vijayakumar, chief investment strategist, Geojit Investments Ltd.

"While it is difficult to make forward-looking projections on global growth where significant uncertainties still exist, the latest domestic growth data suggest limited downside risks to growth. Therefore, we expect a 25 bp cut in policy rate at the June MPC meeting. This coupled with the ongoing accommodative stance, will position MPC to react to any data surprises on either side," said Mandar Pitale, head of financial markets at SBM Bank (India).

Benchmark indices, Sensex and Nifty, were trading flat, albeit in the red territory ahead of the RBI MPC Meet. At 9:28 am, the BSE Sensex index was trading at 81,345 level mark, down by 100 points. Whereas, the NSE Nifty50 index dropped by 19 points and was trading at 24,733.75 level mark.

Nifty Realty, however, opened in green and was trading above 1,000 level mark.

Nifty Bank opened in red on Friday as expectations around RBI MPC's rate decision failed to cheer D-street investors. At 9:40 am, the banking index was hovering above 55,600 level mark, down by 85 points or 0.15%.

"The RBI stands vindicated on growth, but risks from the outlook are not over. We see downside risks to the RBI’s FY26 GDP and CPI forecasts, warranting a sustained monetary policy push. The pressure on the exchange rate has also waned in a weak dollar environment, meaning the RBI can pursue easing despite global financial market volatilities," said Dhiraj Nim, economist, ANZ Research.

"The RBI may continue to keep banking liquidity in a decent surplus around 1% of net demand and time liabilities, aiding rate cut transmission to bank lending rates," NIM said

Geopolitical uncertainty around global economic outlook has somewhat ebbed, says RBI Governor Sanjay Malhotra

The monetary policy committee, headed by RBI governor Sanjay Malhotra, slashed interest rates for the third consecutive time, by 50 bps.

The Central Bank of India has revised its Consumer Price Index (CPI) inflation outlook at 3.7% for the current financial year ending in March 2026.

Even as benchmark indices wobbled, erasing the previous losses made during the early morning trading session, markets gained back momentum as RBI governor announced a larger-than-expected rate cut by 50 bps.

The Nifty Realty index rallied by nearly 2% post RBI's rate cut decision, and was trading at 1,011 level mark.

"The RBI’s decision to cut the repo rate by 50 basis points to 5.5% in June 2025 offers timely support for homebuyers navigating a high-cost housing market. With borrowing rates expected to ease, the reduction brings much-needed relief for those looking to invest or upgrade, making EMIs more affordable and long-term ownership more attainable," said Sunny Bijlani, joint managing director, Supreme Universal

"For aspiring homeowners, especially in the premium segment, it opens doors to spacious, thoughtfully designed residences. On the developer side, it creates momentum to enhance offerings through superior quality, timely delivery, and lifestyle-focused amenities. This move boosts buyer confidence and reinforces the industry’s commitment to delivering future-ready homes that meet evolving urban aspirations," he added.

"As affordable financing remains a key driver of demand in real estate, we welcome the RBI's decision to cut the repo rate by 50 bps, thereby encouraging end-users to make purchase decisions. However, it is important is that the benefits are passed on to borrowers immediately. While homebuyers will be able to secure home loans at lower rates, developers will benefit from low borrowing costs, thereby easing financing pressures," said Ramani Sastri, chairman and MD, Sterling Developers

"With sustained demand and softening home loan interest rates, the sector’s growth momentum will definitely accelerate further with continued policy support, firmly establishing the real estate sector as a key driver of the nation's economic development," he added.

"This (rate cut) marks a key turning point in India’s monetary approach, signaling a move from active easing to a more balanced, data-dependent stance amid rising global uncertainties and volatile capital flows," said Anil Rego Founder and Fund Manager at Right Horizons PMS.

"Inflation is expected to remain within the target band, supported by strong corporate and banking balance sheets and macro fundamentals. The cumulative 100 basis point rate cut since February underscores the RBI’s urgency to support demand, while the shift to a neutral stance signals a more cautious, data-driven approach to balancing growth and inflation risks going forward," Rego said.

The BSE Sensex index rallied over 700 points and was trading at 82,163.40 level mark. Whereas, the NSE Nifty50 index followed suit and surged over 230 points or 0.95%.

From the 30-stock index pack, Bajaj Finance, Axis Bank, Maruti Suzuki, Bajaj Finserv, HDFC Bank and Kotak Mahindra Bank were among the top gainers.

“RBI monetary policy is 10/10, it has an all-round focus, maintaining growth momentum, by cutting rates by 50 bps, liquidity infusion by cutting CRR by 100 bps over the year and targeting inflation at 3.7%. “It is great to see both GOI fiscal policy and RBI monetary policy working in tandem to propel the Indian economy to a new growth trajectory. It augurs well for the industry and our country,” says Sadaf Sadaf Sayeed, CEO, Muthoot Microfin.

“The MPC has delivered an unexpected outsized policy rate cut of 50bps against a consensus expectation of a 25bps cut. This is accompanied by a 100bps staggered cut in CRR and a change in policy stance to neutral. The decision is likely owing to the GDP prints for Q4 of FY25 reflecting weakness in manufacturing and consumption, as well as the adverse impacts of global trade and conflict headwinds. The policy rate easing, combined with the liquidity increase for banks when system liquidity is already comfortable, is likely to add a second engine to the consumption growth flight that is anticipated to be already in flight from the income tax cuts taking effect in FY26. This is significantly positive for urban consumption, which printed weak in past quarters, and will also likely add a fillip to real estate, discretionary purchases, and private capex,” notes Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India.

"A rate cut, while widely anticipated in some quarters, comes as a welcome move for the real estate sector. Lower borrowing costs will positively influence affordability and purchasing decisions, particularly in the budget and mid-income segments. While luxury homebuyers are typically not driven by EMIs or interest rates, a softening monetary policy signals broader economic confidence. We expect renewed interest from NRIs, long-term investors, and domestic HNIs who are looking to diversify into tangible, inflation-resilient assets. Overall, a rate cut acts as a confidence marker, even if its direct impact on the luxury segment is limited," says Lincoln Bennet Rodrigues, Chairman & Founder, Bennet & Bernard.

"A 25 bps rate cut by the Reserve Bank of India (RBI) now appears to be a foregone conclusion. In addition to the rate cut, we see a possibility that the RBI may widen the Liquidity Adjustment Facility (LAF) corridor by increasing the spread between the repo rate and the Standing Deposit Facility (SDF) rate to 50 bps, up from the current 25 bps," states Amar Ambani, Executive Director, YES SECURITIES.

"Such a move would aim to discourage banks from engaging in risk-free arbitrage—borrowing via the triparty repo market and parking excess funds in the SDF. Instead, it would incentivise greater lending activity. This adjustment in the corridor could help redirect surplus liquidity toward productive credit deployment, especially crucial at a time when credit growth momentum appears to be slowing," he adds.

"From a structural point of view, we still need to revive the private investment and consumption in the country, which have shown some traction of late but still require stronger tailwinds. With the fiscal health of the government and corporates, capacity utilisation and government capex still remaining strong, the biggest risk for the upcoming months remains global headwinds and monsoon and weather-related anomalies," says Sankar Chakraborti, MD & CEO, Acuité Ratings & Research.

"The cumulative easing stands at 100bp so far in 2025. With this the repo rate now stands at a near three-year low of 5.5% (August 2022: 5.4%). The effect of which is likely to materialise with some lag in the later part of the year. This leaves limited space to the central bank to support which has led it to change the stance to neutral from accommodative. Thus, signalling that the current rates are just about at the ideal level. We expect, at max one more 25bp cut this fiscal, unless there are surprises from the global economic front or growth declines sharply," notes Paras Jasrai, Economist at India Ratings & Research.

Announcing the monetary policy decision, Governor Malhotra also noted that the MPC is now left with very limited space to support growth under present circumstances after reducing the policy repo rate by 100 bps in quick succession since February 2025. 

"This move underscores the central bank’s confidence in inflation being under control and marks a shift toward reviving demand and stimulating credit. Lower borrowing costs are expected to benefit both households and businesses, reinforcing a consumption-led recovery.

Interest rate-sensitive sectors like housing, auto, and real estate, are poised to gain from the improved affordability and sentiment. Consumer durables and discretionary segments may seem a boost, especially in urban markets. While financial services could face short-term margin pressures, stronger credit offtake and improved asset quality should support medium-term gains. Infrastructure and capital goods may seem a revival in private capex if transmission remain smooth," said Mr. Akhil Puri, Partner, Financial Advisory, Forvis Mazars in  India.

“Front loading of rate cuts by RBI addresses the need to spur growth as short end rates come down aggressively which in turn will assist corporate borrowing through capital markets for the short end. The growth expectations remained at 6.5% for FY26 and inflation expectations lowered to 3.7%.

However we see a large curve steepening as long end rates remain relatively unchanged with RBI stance changing to neutral from accommodative. This implies that further room to cut rates remain limited and data dependent,” Vishal Goenka, Co-Founder of IndiaBonds.com.

During the press conference, RBI Governor Sanjay Malhotra stated, “While 3% appears to be a comfortable reserve ratio for now, it's important to note that this may change in the future. Please don't hold me to this exact figure, we're not committing to maintaining this level indefinitely, but at present, it seems sufficient.”

In the conference, the RBI Governor expressed confidence in the impact of recent policy decisions, stating, “Confident that CRR & repo rate cut will increase flow of credit; not able to quantify the extent. Liquidity is sufficient, we have not given it any thought to any targeted level of call rate.”

RBI Governor Sanjay Malhotra, addressing the draft norms on gold loans, stated, “There was nothing new in the draft norms on gold loans. We have consolidated all other norms. We have seen some regulated entities were not following the norms because there was no clarity hence we have consolidated it. We will today or by Monday morning release the final guidelines.”

In the press conference, RBI Governor Sanjay Malhotra commented, “Rise in COVID cases not a concern for now. There was no major supply chain or economic activity disruption due to the India-Pak war, and whatever little impact it had has been normalised now.”